CONTINUOUS INTERNAL ASSESSMENT 3b

CRITICAL ANALYSIS OF IFM NEWS

A report submitted in partial fulfillment of the requirements for the award of

the degree of Master of Business Administration

By

Saurav Kumar Kalita

2227652

Under the Guidance of

Prof. Bharat Bhushan

School of Business and Management

CHRIST (Deemed to be University), Bangalore

JULY 2023
 1. India's foreign exchange reserves rise $708 million to $602.16 billion

https://www.moneycontrol.com/news/business/economy/indias-foreign-exchange-reserves-rise-7
08-million-to-602-16-billion-11220031.html

The news article about India's foreign exchange reserves rising by $708 million to $602.16
billion for the week ended August 11, 2023, has several implications for international finance.

First, it suggests that the RBI is confident in the ability of the Indian economy to withstand the
current global economic challenges. The central bank has been using its foreign exchange
reserves to defend the rupee against depreciation, and the recent increase in reserves suggests
that the RBI is now less concerned about the need to intervene in the currency markets.

Second, the increase in reserves is a positive signal for foreign investors. It shows that the RBI
has the resources to support the Indian economy in the event of a financial crisis. This could
make India a more attractive destination for foreign investment.
Third, the increase in reserves could lead to a depreciation of the rupee. This is because the RBI
may now be less likely to intervene in the currency markets to prop up the rupee's value. A
weaker rupee could make Indian exports more competitive and boost economic growth.

Overall, the increase in India's foreign exchange reserves is a positive development for
international finance. It suggests that the RBI is confident in the Indian economy and that the
country is well-positioned to withstand the current global economic challenges.

Here are some specific implications for international investors:

● The increase in reserves shows that the RBI is committed to maintaining financial
stability. This could make India a more attractive destination for foreign investment.
● The increase in reserves could lead to a depreciation of the rupee. This could make Indian
exports more competitive and boost economic growth.
● Investors who are looking for countries with strong economic fundamentals and a
positive outlook for the future may want to consider investing in India.

However, it is important to note that the global economic outlook is still uncertain. Investors
should carefully consider their risk appetite before investing in any country.
 2. Non-SLR bond inclusion in HTM expected to deepen corporate bond
market

https://www.business-standard.com/markets/news/non-slr-bond-inclusion-in-htm-expected-to-de
epen-corporate-bond-market-123091300650_1.html

The Reserve Bank of India's (RBI) decision to allow banks to include non-SLR securities in their
held-to-maturity (HTM) portfolios is a significant development for the Indian corporate bond
market. It is expected to invigorate the market and attract foreign investors.

This is because banks will now be able to invest more money in corporate bonds without having
to worry about mark-to-market losses. This will lead to more liquidity in the corporate bond
market and make it easier for companies to raise funds.

The inclusion of corporate bonds in the HTM portfolio is also expected to attract foreign
investors to the Indian corporate bond market. This is because foreign investors are generally
more comfortable investing in bonds that are held to maturity.

Implications for international finance:

 ● The inclusion of corporate bonds in the HTM portfolio could make the Indian corporate
bond market more attractive to foreign investors. This could lead to an increase in foreign
investment in the Indian corporate bond market.
● The increase in foreign investment in the Indian corporate bond market could help to
boost the Indian economy.
● The increase in foreign investment in the Indian corporate bond market could also help to
diversify India's sources of foreign capital.
● It could make it easier for Indian companies to raise money from international investors.
● It could help to reduce India's reliance on foreign currency borrowing.
● It could make the Indian corporate bond market more integrated with the global corporate
bond market.

Overall, the inclusion of corporate bonds in the HTM portfolio is a positive development for the
Indian corporate bond market and for international investors. It is expected to make the market
more liquid and attractive to investors, which could lead to a number of benefits for the Indian
economy and for the global financial system.
 3. Sebi mandates additional disclosures for certain FPIs, releases criteria
and exemption details

https://www.moneycontrol.com/news/business/markets/sebi-mandates-additional-disclosures-for
-certain-fpis-releases-criteria-and-exemption-details-11253321.html

The Securities and Exchange Board of India (SEBI) has mandated additional disclosures for
certain foreign portfolio investors (FPIs). This is a significant development for the Indian capital
markets, as it will increase transparency and accountability in the FPI sector.
The new disclosure requirements apply to FPIs that meet certain criteria, such as having a net
asset value (NAV) of more than ₹500 crore and holding more than 2% of the outstanding equity
shares of a listed company. FPIs that meet these criteria will be required to disclose the following
information:

● The identity of all entities holding ownership, economic interests, or control over the FPI,
up to the level of all natural persons.
● The purpose of the FPI's investment in India.
● The FPI's investment strategy and risk appetite.
● The FPI's exposure to individual stocks and sectors.
● The FPI's voting rights in listed companies.
● The FPI's compliance with Indian laws and regulations.

FPIs that meet the criteria for additional disclosures will have to submit these disclosures to
SEBI on a quarterly basis. The disclosures will be made public on SEBI's website.

The new disclosure requirements are aimed at improving transparency and accountability in the
FPI sector. By requiring FPIs to disclose more information about their investments and activities,
SEBI hopes to deter fraudulent and manipulative practices. The new requirements are also
expected to help investors make more informed investment decisions.

The new disclosure requirements are likely to have a number of implications for the Indian
capital markets. First, they will increase the cost of doing business for FPIs that meet the criteria.
This is because FPIs will have to incur additional costs to comply with the new requirements.
Second, the new requirements could make it more difficult for FPIs to invest in India. This is
because FPIs may be reluctant to disclose sensitive information about their investments and
activities.

However, the new disclosure requirements are also likely to have some positive implications for
the Indian capital markets. First, they will increase transparency in the FPI sector. This will help
to deter fraudulent and manipulative practices. Second, the new requirements will help investors
make more informed investment decisions. This could lead to more efficient allocation of capital
in the Indian economy.

Overall, the new disclosure requirements are a positive development for the Indian capital
markets. They are likely to increase transparency and accountability in the FPI sector, which
could lead to a number of benefits for investors and the Indian economy.

Challenges:
 ● The new disclosure requirements could make it more difficult for FPIs to invest in India.
This is because FPIs may be reluctant to disclose sensitive information about their
investments and activities.
● The new disclosure requirements could increase the cost of doing business for FPIs that
meet the criteria. This is because FPIs will have to incur additional costs to comply with
the new requirements.

Conclusion:

The new disclosure requirements are a positive development for the Indian capital markets, but
they also pose some challenges. It is important to monitor how the new requirements are
implemented and to address any challenges that arise.
 4. European stocks close 1.5% higher after ECB hikes interest rate to
record 4%

https://www.cnbc.com/2023/09/14/european-markets-live-updates-ecb-rate-decision-stocks-and-
data.html

The news article "European markets live updates: ECB rate decision, stocks and data" discusses
the European Central Bank's (ECB) decision to raise interest rates by 25 basis points. This is the
first rate hike by the ECB in over a decade.

The rate hike is a sign that the ECB is concerned about rising inflation in the eurozone. Inflation
in the eurozone is currently at a record high of 8.6%. The ECB is hoping that by raising interest
rates, it will be able to cool inflation without causing a recession.
The rate hike is likely to have a number of implications for international finance. First, it will
make it more expensive for businesses and consumers to borrow money in the eurozone. This
could lead to a slowdown in economic growth in the eurozone.

Second, the rate hike could make the euro more attractive to investors. This could lead to an
appreciation of the euro against other currencies.

Third, the rate hike could make it more difficult for emerging markets to borrow money. This is
because emerging market borrowers often borrow money in euros.

Overall, the ECB's rate hike is a significant development for international finance. It is likely to
have a number of implications for businesses, consumers, and investors around the world.

Here are some specific implications for international finance:

● The rate hike could make it more expensive for businesses and consumers in the
eurozone to borrow money from foreign lenders. This could make it more difficult for
European companies to expand into foreign markets and for European consumers to
purchase goods and services from foreign companies.
● The rate hike could make the euro more attractive to investors. This could lead to an
outflow of capital from other countries, such as the United States and the United
Kingdom. This could put downward pressure on the value of these currencies.
● The rate hike could make it more difficult for emerging markets to borrow money. This is
because emerging market borrowers often borrow money in euros. The higher interest
rates in the eurozone could make it more expensive for these borrowers to service their
debts.

The ECB's rate hike is a sign that the central bank is serious about tackling inflation. However, it
is important to note that the rate hike could have negative implications for international finance.
Businesses, consumers, and investors around the world should be aware of these implications
and take steps to mitigate any risks.
 5. Imports from Russia doubles to $25.69 billion in April-August

https://www.deccanherald.com/business/economy/imports-from-russia-double-to-2569-billion-in
-apr-aug-2688401

The news article "Imports from Russia double to ₹2569 crore in Apr-Aug" discusses the increase
in India's imports from Russia in the first four months of the financial year 2023-24. The article
states that imports from Russia have doubled to ₹2569 crore in April-August 2022, compared to
₹1234 crore in the same period last year.

This increase in imports from Russia is significant for a number of reasons. First, it suggests that
India is becoming more reliant on Russia for certain goods and services. Second, it could be seen
as a sign of India's willingness to do business with Russia despite the ongoing war in Ukraine.
Third, it could have implications for India's international financial relations.

From an international finance perspective, the increase in imports from Russia is likely to have a
number of consequences. First, it could lead to an increase in India's trade deficit with Russia.
This is because India is importing more goods and services from Russia than it is exporting to
Russia. Second, it could lead to an increase in India's exposure to Russian financial markets. This
is because India is paying for its imports from Russia in rupees, which means that it is
accumulating Russian rubles.

The increase in India's exposure to Russian financial markets could pose a number of risks. For
example, if the Russian economy were to experience a severe recession, the value of the ruble
could decline sharply. This could lead to losses for Indian businesses that have accumulated
rubles.

The increase in India's trade deficit with Russia could also have implications for India's
international financial relations. For example, if India's trade deficit with Russia continues to
grow, it could lead to a decline in India's foreign exchange reserves. This could make it more
difficult for India to finance its imports and could also lead to a depreciation of the Indian rupee.

Overall, the increase in imports from Russia is a significant development for India's international
finance relations. It is important to monitor the situation closely and to assess the potential risks
and opportunities.

Here are some specific implications of the increase in imports from Russia for India's
international finance relations:

● India's trade deficit with Russia is likely to increase, which could lead to a decline in
India's foreign exchange reserves.
● India's exposure to Russian financial markets is likely to increase, which could pose risks
if the Russian economy were to experience a severe recession.
● India's reliance on Russia for certain goods and services could make India more
vulnerable to disruptions in the global supply chain.
● India's relationship with Russia could come under scrutiny from other countries, which
could have implications for India's access to international financial markets.
 6. Exports dip 6.86% to $34.48 bn in Aug; trade deficit at $24.16 bn

https://www.deccanherald.com/business/economy/exports-dip-686-to-3448-bn-in-aug-trade-defic
it-at-2416-bn-2688250

The news article "Exports dip 686 to 3448 bn in Aug, trade deficit at 2416 bn" is relevant to
international finance in a number of ways.

First, the decline in exports is a sign that global demand for Indian goods is weakening. This
could have a negative impact on India's foreign exchange reserves and its ability to service its
external debt.
Second, the widening trade deficit means that India is importing more goods than it is exporting.
This is putting pressure on India's current account balance and could lead to a depreciation of the
Indian rupee.

Third, the decline in exports and widening trade deficit could have a negative impact on India's
economic growth. This is because exports are a key driver of economic growth in India.

From an international finance perspective, the decline in exports and widening trade deficit could
have a number of implications. First, it could lead to a decrease in foreign investment in India.
This is because foreign investors may be concerned about India's economic outlook.

Second, it could lead to an increase in India's external debt. This is because India may need to
borrow more money from foreign lenders to finance its trade deficit.

Third, it could lead to a depreciation of the Indian rupee. This is because the Indian rupee is
becoming less attractive to foreign investors.

Overall, the decline in exports and widening trade deficit are negative developments for India's
economy and international finance. The RBI will need to take steps to address these challenges,
such as by reducing interest rates and boosting exports.

Here are some specific implications for international finance:

● The decline in exports could lead to a decrease in foreign exchange reserves. This is
because India will need to use its foreign exchange reserves to import more goods than it
is exporting.
● The widening trade deficit could lead to a depreciation of the Indian rupee. This is
because the Indian rupee will become less attractive to foreign investors.
● The decline in exports and widening trade deficit could lead to a decrease in foreign
investment in India. This is because foreign investors may be concerned about India's
economic outlook.
● The decline in exports and widening trade deficit could lead to an increase in India's
external debt. This is because India may need to borrow more money from foreign
lenders to finance its trade deficit.

The RBI will need to take steps to address these challenges, such as by reducing interest rates
and boosting exports. The RBI will also need to work with the government to develop policies
that support economic growth and attract foreign investment.
 7. FEDAI should help in ensuring fair prices to small clients, streamlining
procedures: RBI DG

https://economictimes.indiatimes.com/news/economy/policy/fedai-should-help-in-ensuring-fair-
prices-to-small-clients-streamlining-procedures-rbi-dg/articleshow/98516292.cms?from=mdr

According to recent news, M. Rajeshwar Rao, the Deputy Governor of the Reserve Bank of India
(RBI), has provided guidance to the Foreign Exchange Dealers' Association of India (FEDAI) on
how to ensure equitable pricing for small clients and streamline their processes. This move
reflects the RBI's commitment to ensuring that retail customers and small businesses have access
to fair and cost-effective foreign exchange services. FEDAI, which serves as a self-regulatory
organization (SRO) overseeing foreign exchange traders in India, possesses extensive market
knowledge, and the RBI values its input in evaluating rules and compliance procedures.

Small enterprises and retail customers have raised concerns with the RBI regarding the high fees
associated with foreign exchange transactions. These fees can impose a significant financial
burden on small businesses, potentially hindering their ability to compete with larger
corporations. By collaborating with FEDAI, the RBI aims to reduce these fees and enhance
access to foreign exchange for small enterprises and retail customers.

The RBI's actions align with the government's objective of promoting financial inclusion,
ensuring that all individuals, regardless of their size or income, have access to financial services.
The RBI's efforts to lower the cost of foreign exchange contribute to achieving this goal,
benefiting small businesses and retail customers across India. This underscores the RBI's
dedication to ensuring that everyone can access fair and reasonable financial services.

The RBI's decision to partner with FEDAI exemplifies how regulators can leverage the expertise
of SROs to advance their objectives. Self-Regulatory Organizations possess a deep
understanding of the sectors they oversee, enabling them to provide valuable insights and support
to regulators.

Another positive aspect is the RBI's emphasis on enhancing efficiency and transparency in the
foreign currency market. Transparency and efficiency are crucial for ensuring equitable currency
conversion rates for small enterprises and retail clients, as it allows all market participants to
access the same information and make informed decisions.

Furthermore, the RBI's commitment to financial inclusion is commendable, as the expansion and
growth of the economy hinge on widespread access to financial services. By making foreign
exchange more accessible, the RBI is contributing to ensuring that everyone, regardless of their
income or size, can participate in the economy.

FEMA Isn’t Ready for Our New Age of Climate Disasters

The article discusses Michigan's receipt of $51 million from FEMA's new Hazard Resilience
Loan Fund. The fund was created to help states and communities make infrastructure more
resilient to natural disasters.

The article highlights several projects that Michigan plans to use the funding for, including:

● Improving flood control measures in Detroit

● Strengthening levees in Saginaw
● Making roads and bridges more resistant to earthquakes
● Upgrading water and sewer systems to withstand extreme weather events
 8. Michigan gets $5.1M from new FEMA hazard resilience loan fund

https://www.mlive.com/public-interest/2023/09/michigan-gets-51m-from-new-fema-hazard-resili
ence-loan-fund.html

The article also quotes several experts who say that the funding is a welcome boost for
Michigan's efforts to become more resilient to climate change.

Analysis:

The article is well-written and informative. It provides a good overview of the FEMA Hazard
Resilience Loan Fund and Michigan's plans for using the funding. The article also includes
quotes from experts who provide valuable insights into the importance of the funding and
Michigan's efforts to become more resilient to climate change.
Overall, the article is a valuable resource for anyone interested in learning more about
Michigan's efforts to become more resilient to natural disasters.

Here are some additional thoughts on the article:

● The funding is significant, and it is good to see that Michigan is using it to invest in
projects that will make the state more resilient to climate change.
● The projects that Michigan is planning to undertake are all important, and they will help
to protect the state from the impacts of natural disasters.
● It is important to note that climate change is a serious threat to Michigan, and the state
needs to continue to invest in resilience measures.